Insurers and Gay Groups Angered by Dukakis Move on AIDS Tests

Special to the New York Times

Published: July 26, 1987

BOSTON, July 24—
When Gov. Michael S. Dukakis decided earlier this month to reverse a state policy that barred AIDS testing by insurance companies, he hoped his position would satisfy insurers while protecting the rights of homosexuals and lesbians.

Instead, the move was condemned by gay organizations as discriminatory and a sop to the industry while insurers contended that, even under the new regulations, government was unacceptably interfering with them.

The Governor's Insurance Commissioner, Peter Hiam, resigned, charging that the administration had sacrificed his policy for political reasons. State Attorney General James M. Shannon issued a terse statement calling the move ''a Pyrrhic victory'' for insurers and vowed to guard the civil liberties of homosexuals and lesbians. Some AIDS Tests Permitted

The new regulations, which may still be changed after public hearings, allow insurance companies to give AIDS tests to applicants for individual life and noncancelable disability insurance, but they prohibit testing applicants for health insurance and group life and disability policies. The regulation would require companies to offer life insurance up to $100,000 without compelling applicants to be tested. The regulations would void the state policy Mr. Hiam enunciated in December that prohibited insurance companies from testing applicants for AIDS. Washington, D.C., and California are the only other jurisdictions in the country where insurers are prevented from administering a test for the AIDS virus.

Mr. Hiam's policy provoked an angry protest from insurance companies. They complained that it would expose them to insolvency because it would prevent them from denying coverage to people already infected with the fatal acquired immune deficiency syndrome. They say the new regulations still do not protect them and contend that the regulations will bring a wave of AIDS victims to Massachusetts.

The Governor's Consumer Affairs Secretary, Paula Gold, called the new regulations the most ''carefully considered, comprehensive'' such plan in the country.

Ms. Gold, who is Mr. Hiam's superior, agreed with the insurers' contention that Mr. Hiam's original policy was too restrictive. Adding Political Element

In the beginning of the year, she began meeting with insurance company representatives to resolve their concerns. Leanne Berger, former chief enforcement counsel for the State Insurance Division, recalled that the first meeting was very tense. She said some of the insurers were ''getting hysterical without presenting specifics about why it would cost money.'' Then one insurer, noting that Mr. Dukakis was a candidate for the Democratic Presidential nomination, said that a number of large insurance companies were situated in Iowa, where the first Presidential caucuses will take place.

''He said that if the Commissioner does not bend on this it could become a real problem for Dukakis, given his presence in Iowa,'' Ms. Berger said. ''We all interpreted it as a threat.'' Ms. Gold, who was present at the meeting, said she did not recall such a statement, but she added, ''The bottom line is that we didn't agree with the Commissioner's policy because it didn't make sense to us, not because we were under pressure from any group.''

Mr. Hiam has objected to the new regulations on several points. He said they were issued before he could complete a survey of insurers to determine whether there was a financial need for the new regulations. A partly completed survey of the companies that do business in Massachusetts showed a payout of $551,000 in claims to AIDS victims from 1984 to 1986. A total of $1.5 billion in health-related claims were paid in the same period statewide. Question of Risk

In his resignation letter to the Governor, Mr. Hiam said the payouts amounted ''to less than the combined annual salaries paid to four of the insurance industry officials who have been lobbying vigorously against the division's policy.''

He said the financial risk did not match the damage to those who, for example, received results on AIDS tests that falsely showed them to be infected. And he said the regulations did not assure that the results would be kept confidential, despite Mr. Dukakis's assurances that the safeguards are the ''toughest, most aggressive in the country, bar none.''

Mr. Hiam noted that the safeguards were softened within a day of his resignation. He said Ms. Gold's staff changed a key provision that would have prevented insurance companies from filing AIDS testing data with a national computer bank used by the industry. Under the regulations released by Ms. Gold, the data, with qualifications, can be stored in the computer bank.